Perth Australia’s tightest office market

Perth still leads Australia with its increasingly tight office market. The number of available full floors dropped by one-third since June alone.

Savills says there are 65 prime full floors available, but only 16 ready for occupation within the next six months. Its divisional director of office leasing, Graham Postma, said most free space beyond that would come from tenants BHP Billiton and Bankwest relocating to City Square and Raine Square.

Also, next year the state government will move out of Governor Stirling Tower into the suburbs and 140 William Street.

“The major influence on Perth will be a lack of new supply until at least 2013," Mr Postma said. “Following the completion of City Square and Raine Square, only one new development is committed to proceed – Charter Hall’s WorkZone, which has been precommitted by Leighton and is due for completion in August 2013."

Several developers are chasing clients to precommit to new developments including Brookfield Office Properties’ second City Square tower. Mr Postma said while he expected Brookfield to wait for an anchor tenant, it was the only developer with capacity to feasibly push through with the development regardless.

Development approval for the tower is expected in the next couple of weeks and Brookfield is holding off on a leasing model decision until then.

Colliers director of office leasing, David Cresp, said new developments were more feasible than during the office space shortage of 2006-08, as rents were higher.

“Rents of $700 to $750 per square metre are needed to make a new development viable . We’re starting to see that in some premium spaces," he said.

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CBRE global research and consulting manager, Luke Nixon, said Perth office rents recorded the nation’s strongest growth in the past year. Prime net face rents increased 2.4 per cent in the first half of 2011, and were up 7.5 per cent over the year to September.